Showing posts with label Life. Show all posts
Showing posts with label Life. Show all posts

Nassim Taleb's Fooled by Randomness

A few years back I read a book called Millionaire Next Door which when distilled had 7 or 8 bullet points which go like spend less than you earn, make a budget and stick to it, choose a profession you like, don't show off your wealth, etc. At the end of it, I thought, wow, this must not be hard. Then I realized that my parents and relatives and many of my friends' parents all have practiced most of the attributes mentioned in the book for most of their lives but they're nowhere near half as rich as the one's in the book. It wasn't hard to deduce - the authors of the book just looked at what the rich guys were doing; they weren't social scientists investigating the financial health of all of the cross-section of the society that had those millionaire attributes. While you could be persevering, smart, living well below your means and materialistically modest there are still pretty good chances that you could end up not becoming a millionaire. And I thought at that time what if a book dwelt on this aspect - where the author exposited in great detail that you could be doing all the right things successful people do and still remain not successful[1] enough all your life - the book would bomb at the marketplace. Who'd want to read a dejecting theory? Apparently, many. Taleb's Fooled by Randomness does exactly that and much more.

Taleb is a Wall Street trader and a professor in risk engineering in addition to many other things. He's well read and the range of references he makes here almost make me wonder if he were simply showing off his diverse education. The crux of the argument he makes in this book is that blind luck or chance occurrence is discounted by most, especially the successful people. His area of expertise is in the markets and he extensively draws analogies from the life in Wall Street to pound the idea home. He talks about the human nature to fit everything into a seemingly logical order and hence we fall into a narrative fallacy of explaining rare events (he calls them black swans) after they've occurred. Taleb effectively informs us that random (or rare, if you will) events will always be part of the human cycle and our historians and journalists should stop glamorizing them by fitting them into a logical flow and establishing a fake order retrospectively.

Once you accept that not everything follows a pattern, at least when it comes to the world of finance, then the expertise of a successful trader is called into question. That's what the author does - he claims to not know the how or where or what or when of markets - and in openly expressing his ignorance he also claims his superiority over many other traders who think they've somehow struck a golden forumla whereas in reality they're just deluded. Taleb even writes about a trading company that had Nobel prize economists[2] but crashed spectacularly in spite of their knowledge of the markets. Funnily, it looks like these economists referenced Taleb's papers on black swans after they went bust to absolve themselves - another attempt by these people to explain their losses and successes.

I'm terribly uninformed of what goes on a trading floor and I'm willing to take most of Taleb's theories at face value. But he extends most of his theories to life and I'm not too comfortable with his condescending tone here. Of course the rich and famous and successful guys did some right things at the right time - they either sat next to a venture capitalist in a long flight or were experts in a social phenomenon whose time has arrived because of technological breakthroughs or were married into a business/political family that had connections.... This interpretation of doing the right thing at the right time is something only time can confirm. It is appropriate to acknowledge the role of luck in making big. But Taleb gave me the impression that hard & smart work doesn't get you anywhere without luck and I don't warm up to that idea. In fact, he uses the example of dentistry as a stable profession through most of the book, and explains the low stress associated with a steady growth as opposed to a fund manager who is invariably stressed every minute of the day and has a high risk of crashing down. But he doesn't seem to imply dentistry as a successful profession by itself.

At some point I wanted to drop the book because it was getting redundant. He was just providing different use cases to illustrate his central theme; but at least he kept issuing nuggets from diverse fields such as philosophy, poetry, history & mathematics which kept me going. (With all that, I read only 13 out of 14 chapters). If you have a pragmatic view of life this book is not going to enlighten you - you already know that chance does things that smartness alone can never do. But that degree of unpredictability in our markets, as painted by the author, unsettled me a bit. In spite of its redundancy it's not a bad book. It was like having a cup of tea with your well educated, well traveled uncle - he repeats some jokes, but he tells them interestingly. So you sit and listen without fussing.

[1] Success in this context is mainly by money. The author cites a scenario where constant exposure to the ups and downs of market arrows takes a high toll on health and then goes on philosophical introspections on what good is money without good health.

[2] There's no such thing as Nobel prize in economics. The award is presented by the Swedish Central Bank and doesn't come from the Nobel fund. Taleb repeatedly points this out. He somehow can't get himself to place economists who predict and create patterns along with scientists.

PS: I'll take a 10 day break before I start my next book - Alan Sokal's Fashionable Nonsense.

Insomnia

By the time I hit the bed, she was in the middle of her journey. I slowly moved the hair strands at the back of her neck. Her weight has been oscillating for a while now, a constant flux around her tummy and cheeks. But her neck, which I remember how it was exactly since I met her, has remained the same size.

There are some events, which are of absolutely no significance that have stayed in my mind. I recall an evening when she was talking to our neighbour. Nothing special about the day: neither breezy nor sultry; nothing special about her appearance: neither flashy nor simple; nothing special about her mannerisms: neither forced nor natural. But then, I remember almost every movement she made then, from her shift in balance to hair adjustments, from her lazily elegant leaning on a wall to a semi-brisk walk, from her lullaby of a silence to her cascade-flow words. A happy life, I think is constituted by a collection of such undecorated but memorable, insignificant but worthwhile events.

Dead Silence

Kameshwaram is a village south of Velankanni, the house of famous Shrine Basilica. The residents were two-fold: farmers and fishermen. The fishing hamlet comprised of 200 families before the tsunami and now, it has close to 100 or a number near that. It has atleast a hundred coconut trees and each one survived. A bulldozer was clearing the top of a hut when I arrived with other volunteers. The face masks, I don't know to what extent they were helpful in preventing air-borne germs from entering my nostrils, but they certainly didn't help with the foul smell of rotting flesh. A young girl's body was dug out, 7 days after her death. She was carried in a bedspread and buried a little far from the hamlet. Someone said "It's Moorthy's daughter".

We had some material resources, but more importantly were asked to provide emotional support(?), offer them hope and promise a better future. In a manner of speaking, I'm quite efficient in using my words with strangers. I started with a middle-aged man. He's short and a little stout and maybe around 50. His arms were like wooden logs. I enquired about food and other basic amenities. "It's been 7 days since I had food. There are many people like you who come here and offer help. We're grateful. But, I can't eat" he said. He said his stomach is petrified and the sight of food doesn't provoke anything. He was at sea on the fateful day with his sons. He could feel the unusual strength of waves, but didn't even imagine the scale of disaster.

Every fishing family had atleast 5 different fishing nets (for various seasons and fishes) and the entire cost of the nets ran upto Rs.50,000. All the nets were tangled unimaginably and were rendered useless. The hamlet in the shape of a rectangle of 1 X 0.5 km, packed with huts and a few brick houses, is devastated. Only a couple of brick houses withstood the waves with little damage. Boats were toppled, and many were in two pieces. The entire hamlet was strewn with fishing nets. We had to walk with care so as to avoid getting struck in the nets and falling down.

As I walked around, this woman who was staring at the group clamoring for buckets and mugs started talking to me without looking at me: "I lost my husband and two kids." She then turned toward a ruined hut, which I assume to be her residence. When I started to mumble "We're all here to help you. God will..." she said "I lost six goats." She hadn't listened to me. I don't even know if she acknowledged my presence. Another woman was weeping: "I want to see my daughter's face. That's all I want". I decided it was better not to waste my words of hope and future. Because no one's listening.

Women are emotionally fragile. They're inconsolable. But the men are emotionally strong. I was amazed at their courage. Jayapal has lost six members from his family. He is Moorthy's brother and it was his brother's daughter who was found that morning. The corpse was washed atleast fifty metres from their home and gotten struck in another hut. Jayapal who was on the shore that morning started running as soon as he saw the tsunami. Water receded in five minutes, he said. When he ran back, his house (brick) was flattened. He found his mother dead near his house. His brother and sister-in-law were washed far away. His father was hurt and he took him to the nearest hospital and battling death for 6 days, his father relented. While he had taken his father to the hospital, the farmers, who were deep in the village had come and looted Rs.50,000 and gold laces from their iron shelf, which had remained intact.

Jayapal, who is shattered at the loss of his family is least worried about the material loss. He showed the cardboard case of a new LG engine which he had bought for his boat at Rs.40,000. He said the engine could be lying beneath the debris. I asked him: "Would you go back to the sea". He thought for a while and said: "We've had bad days at sea. But nothing like this. I now fear the sea. But I don't have many alternatives. I could open a shop here, or go to the city and find a job..... I've been a fisherman all my life. I guess I'll go to the sea again."

I moved. Volunteers were talking to this guy, and I didn't get his name. "I started climbing the tree (coconut) as fast as I can. I could hear my neighbors crying for help. But, I was helpless." Tsunami which was high enough to drench the 40 metre trees left him without his shirt and lungi. "I could see bodies all over the place from the tree top." There are many survival stories and many death stories. They all sounded the same and somehow, each one is different, as if every single death and every single survival had it's personal tsunami.

The government officials!! How could I not write about them. These are people following orders. An order issued by the local chief officer, who was instructed by the district collector, who received an order from the state chief minister. On the night of new year's eve, we were transporting clothing materials from Nagapattinam to Velankanni, when this police officer (who is celebrating the new year) who should have drunk to his neck started harassing the truck driver with bullshit questions. The driver, who should've seen many such police officers in his career, deftly handled him. Even in Kameshwaram, a couple of police constables who were supposed to route the relief supply vehicles to the fishing hamlet segment of the village, simply rerouted the government supplies to the local farmers. Later, we were told that the police have a connection with the farmers who bribe them for a variety of reasons (illegal arrack, etc) and the police were only expressing their gratitude.

What we volunteers did, you ask!! Thanks for asking. The answer is bare minimal. We distributed water packets, cleaned houses that seemed usable, went door to door educating people about epidemics and requesting them to get inoculated, transport clothes and rice sacks and a few more trivial acts. For most of the time, we were listening to them speak. And that was the most difficult thing.

Still with me? Great! I appreciate your patience. Have a wonderful 2005!!

--Originally written for LJ on 04-01-2005

Quake Hits Me

My city, Chennai (Madras) in South India is one of the worst hit parts by the tsunamis triggered by the quake. Marina beach, which I frequent a lot is throwing up dead bodies since yesterday morning. Water has come into the city. The beautiful beach road is partially submerged. Hundreds of fishermen are missing, the media says, and we know what became of them. The official toll, so far is 2500 in TN, my state. Since the chief minister has announced Rs.1,00,000 for every family that has lost a member, the official toll would in no way near the real figure.

My uncle residing near the beach said that he woke upto a rude but brief jolt and found everything okay after a while. Then, the tsunamis, the giant killer waves, slowly showed their presence. Nagapattinam, home of around 5000 fishermen is very badly hit. Many were at sea and their families lived close to the shore. The hospitals are ill-equipped to handle such big-scale emergencies. The top bureaucrats would see this as an opportunity to swindle from the emergency relief fund. Thanks to the public that are providing fantastic humanitarian assistance. They need to be educated about the potential outbreak of epidemics (open drainage mixing with water and flowing around the streets) and the means to prevent them.

Whenever I saw a bunch of corpses that belonged to Palestine or Sudan, I would go 'Oh my god! It's terrible' and continue my routine. Today morning, brushing my teeth, I didn't find the usual boring face in the mirror. I was unusually very aware and conscious of my morning routine activities that 'routine' seems an inappropriate word to describe my yoga and shitting and bathing and eating. Yes, I'm alive.

--Originally written on 27-12-2004 for LJ.